David makes some great points in his responses, all of which essentially acknowledge the counter-productive nature of year-end performance reviews. Of course, measuring the performance at the end of the year, when the worker can no longer do anything about it, doesn’t make any sense in the first instance. But the fundamental question posed was whether one should be congratulated or rewarded for winning the billable hour competition amongst associates. Even the firm posting the question acknowledges "isn’t there a risk that we will set up an unhealthy competition and seem to encourage less team work?"
David responds as follows:
"If you have been coaching all year, why do you need a year-end review?"
"If there is a need for something year-end, shouldn’t it be less of a "review" and focus almost entirely on looking ahead as to what each person can and should be doing to enhance their career? What’s the point of looking back?"
"In a law firm, aren’t the number of billable hours determined by what the partners assign to the juniors? If so, what do high personal billable hours reflect? Popularity among the partners? A more dependable person? Someone too dumb to hide out when they are already busy? I’d discuss the personal billable hours and try to understand them, but I would stay away from using them as a performance metric."
I would add an additional comment to David’s always-thoughtful response. Year-end performance appraisals suck for both, the person being appraised and the appraiser. Associates wait all year long to find out whether or not they done a good job and receive a bonus. Partners are put in a position of having to either reward or not reward a particular associate during a single week of a 52-week year.
One of the benefits of having a smaller firm is the opportunity to provide rewards and appraisals throughout the year. If a big case settles, money isn’t horded until December of the following year. Some is reserved and much is distributed so that the reward has a sense of immediacy. It is this immediacy that creates incentives for the workforce. If you tell someone they did a good job on a project that concluded six months prior, you will have lost the opportunity to reinforce great work product. Even more importantly, you will be forced to discuss what went good and what went poorly on projects as they conclude.
The evaluation and coaching should occur throughout the year. Feedback and rewards should occur in real-time.